Uber's third-quarter revenue of $8.34 billion increased 72% year-on-year


 Sina Technology News Beijing time on the evening of November 1st, Uber (NYSE: UBER) today released financial results for the third quarter of 2022 ended September 30. According to the financial report, Uber’s third-quarter revenue was $8.343 billion, an increase of 72% compared with $4.845 billion in the same period last year. Excluding the impact of exchange rate changes, the year-on-year increase was 81%. Net loss attributable to Uber was $1.206 billion, down 50% from a net loss of $2.424 billion a year earlier.


  Third quarter results:


  Gross Bookings was $29.1 billion, up 26% from $23.1 billion a year earlier. Excluding the impact of exchange rate changes, the year-on-year increase was 32%. The order total of $29.1 billion was slightly below Wall Street analysts' average estimate.


  Among them, the total order value of online car-hailing service (Mobility) was 13.7 billion US dollars, an increase of 38% year-on-year. Excluding the impact of exchange rate changes, the year-on-year increase was 45%. Delivery orders totaled $13.7 billion, up 7% year over year. Excluding the impact of exchange rate changes, it was up 13% year-on-year. The order total was below analysts' average estimate.


  Revenue was $8.343 billion, up 72% from $4.845 billion in the same period last year. Excluding the impact of exchange rate changes, the year-on-year increase was 81%. That compared with Wall Street analysts' average estimate of $8.1 billion.

By region, the U.S. and Canada market revenue was $5.000 billion, an increase of 89% year-over-year. Latin America revenue was $518 million, up 33% year over year. Revenue in Europe, Africa and the Middle East was $1.878 billion, up 77% year-over-year. Asia Pacific revenue was $947 million, up 27% year over year.


  Net loss attributable to Uber was $1.206 billion, down 50% from a net loss of $2.424 billion a year earlier.


  Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $516 million, compared with $8 million a year earlier and analysts' average estimate of $458.7 million.


  Cash flow from operations was $432 million and free cash flow was $358 million.


  Unrestricted cash and cash equivalents were $4.9 billion at the end of the third quarter.


  In the third quarter, Uber had 124 million monthly active consumers, up 14% from 109 million a year earlier. The number of trips was 1.95 billion, an increase of 19% year-on-year, and an average of about 21 million per day.


  Performance Outlook:


  Uber expects total orders to reach $30 billion to $31 billion in the fourth quarter of 2022. Excluding the impact of exchange rate changes, it would have increased by 23% to 27% year-on-year.


  Adjusted EBITDA will be $600 million to $630 million.


Net profit halved, stock price plunged, Meta's future uncertain

 When the Metaverse was still hailed as an outlet by the outside world, Meta, the "leader" company of the Metaverse, could no longer carry it.


  Recently, Meta announced its third-quarter operating results. According to the financial report, Meta's revenue for the quarter was US$27.714 billion, which was higher than the US$27.38 billion previously predicted by analysts, but compared with the same period last year, it fell by nearly 4%. Meta's net profit for the quarter was US$4.395 billion, a 52% drop compared to the same period last year, and this is the fourth consecutive quarter of Meta's net profit decline.

In terms of specific business segments, advertising revenue, as Meta’s core revenue, generated $27.24 billion in revenue this quarter, down 3.8% year-on-year. Reality Labs, the metaverse business that Meta has high hopes for, reported revenue of $285 million in the quarter, down nearly 49% year-on-year, and its loss widened to $3.7 billion from $263 million in the same period last year. Reality Labs has accumulated losses of more than 9 billion US dollars this year, and this number will continue to expand in the future.


  However, in the face of the company's continued losses in the Metaverse project, Zuckerberg pointed out in a conference call with investors that Meta will continue to increase its investment in the Metaverse project in the future, including the development of augmented reality technology. And neural interface technology, which has also caused dissatisfaction among many investors.


  In the secondary market, since Meta announced its third-quarter earnings report, the stock price has fallen by 24%, missing the $100 mark. Since the beginning of this year, Meta's stock price has fallen by 55%, and its market value has evaporated by more than 550 billion US dollars. Inside the company, longtime Meta shareholder Altimeter Capital called on the company to cut wage costs by at least 20% and limit Metaverse spending to $5 billion a year.


  But in fact, for Meta, this thunderstorm may be just the beginning, bigger and more difficult challenges are yet to come, and the night ahead will become extremely long.


  How will Meta make money in the future?


  Zuckerberg has said that the metaverse business cannot see benefits in the short term, and during this period, revenue from traditional businesses needs to be continuously transfused to Reality Labs. But the question is, as the traditional business of Meta, the advertising business itself is a "mud Buddha crossing the river", so how can it be transfused to Reality Labs?


  First of all, as a "barometer of the economy", advertising is closely related to the operation of the macro economy. Currently, the regions supporting Meta's revenue mainly come from North America and Europe. Taking the first three quarters of this year as an example, the combined advertising revenue of the two regions accounted for about 68% of Meta's total advertising revenue.

However, the economies of these two regions are now facing the risk of recession. Taking the European region as an example, Zhongtai Securities once pointed out that after the epidemic, the recovery speed and degree of recovery of the European economy is not as good as that of the United States, the European economic momentum is weak, and subsequent growth is weak.


  Zhang Wei, the person in charge of an overseas advertising business in China, told us that due to the economic downturn, many advertisers are currently cutting their budgets. In the past, Meta was a must-investment platform for customers, but now it has become the first advertising channel for customers to compress. If the economies of these regions cannot recover as soon as possible in the future, Meta customers will continue to lose.


  Secondly, the current limited advertising spending of customers tends to shift from digital advertising to online video advertising, but Meta's Reels short video service has not yet been able to drive the growth of its core advertising business.


  The reason is that its own traffic is insufficient. Taking user usage time as an example, according to the Meta research document "Creators x Reels State of the Union 2022", Instagram users spend a total of 17.6 million hours watching Reels every day, which is still less than the 197.8 million TIK TOK users spend on the platform every day. one-tenth of an hour.


  The worse problem is that Reels' shortcomings are difficult to fill in the short term. In particular, YouTube and TIK TOK have signed a large number of high-quality talents, and they have ensured the sustainable growth of the talents' income from traffic sharing, advertising revenue and other aspects. Reels may find it difficult to move its foundation. The existence of this short board makes it possible for the quotation of Meta advertisements to continue to fall.

Finally, Meta's previous "personalized advertising" effect has been declining since Apple launched its privacy policy. A former Meta client said that the ROI of advertising on Meta used to be between 5-6, but now it is good to be able to do 1, which has also triggered a large number of "fleeing" of Meta advertisers.


  According to Meta CFO Dave Wehner, he also publicly stated that after Apple launched the APP privacy function, Meta will lose 10 billion US dollars in advertising revenue every year.

It is worth noting that although Meta claims that the company is conducting research and development on artificial intelligence to improve advertising accuracy. But the question is, Meta has burned so much money in the Metaverse project, does the company still have enough funds to support the research and development of the advertising project?


  In addition, back in 2020, Meta was boycotted by advertisers for its poor handling of misinformation and hate speech on Facebook, causing reputation damage and the aftermath of the incident. As the capital market has paid more and more attention to the ESG (environmental, social, and corporate governance) of enterprises in the past two years, many advertisers are worried that this situation will still occur in the follow-up Meta? This also makes many advertisers take a wait-and-see attitude towards Meta's advertising.


  However, in the context of the heavy pressure of Meta's advertising business, many executives within the company, including COO Sheryl Sandberg, David Fisher, and Rollin Iverson, have left. The new executive, Manny Levine, is a complete advertising layman. Many investors are worried that if Marnie Levine makes a decision error, I am afraid that Meta's advertising business will decline more severely.


  Unknown Metaverse


  Under the continuous pressure of the advertising business, Meta must find a sustainable profit method as soon as possible in the Metaverse field in order to build investor confidence. But the reality is that this path to profitability is difficult.


  In fact, VR products, as the best hardware carrier for linking the Metaverse, are also the base for the development of the Metaverse. Although the current sales of Meta's headset products are indeed very high. For example, in 2021, the global VR headset shipments will reach 10.95 million units, and the share of Oculus, a subsidiary of Meta VR business, will reach as high as 80%. In the Chinese market, according to data released by Magic Mirror Market Intelligence, during the period from 2021.7 to 2022.6, Oculus sales were 133,400 units.

However, in view of the substantial price increase of Oculus products, Meta’s previous pricing of Oculus had the meaning of losing money and making a profit, which cannot explain why Reality Labs lost so much. But the problem is that in the context of the current weak consumer electronics market at home and abroad, the price increase of Oculus has also reduced its sales from 2.4 million units in the second quarter of this year to 1 million units in the third quarter, and its sales have almost been cut in half.


  On the one hand, the declining sales will directly impact Meta's content ecological layout in the Metaverse. Since the current VR fitness, VR games, and VR film and television are still in their infancy, the initial development cost is still relatively high, which urgently needs to transfer this part of the cost through subsequent operations, so that developers can achieve profitability. However, if sales continue to decline, it also means that the bottleneck of Meta’s future headset users has already appeared, which will inevitably discourage a large number of developers. The lack of content has caused a backlash on sales.


  On the other hand, as the cost of VR core components continues to rise, the continuous decline in sales also means that there is no right to speak in the supply chain, and it is even more difficult to reduce costs. This seems to be another "dead loop".


  The more critical issue is that the current free cash flow of Meta has fallen from a cliff of $12.562 billion in Q4 2021 to $1.73 billion. Although Meta has taken salary cuts and job freezes to reduce costs, this is not in line with the Metaverse project. Compared with the huge investment, it is a drop in the bucket. Obviously, Meta has been unable to follow the previous "low price for market" route.

 When a clear product strategy has not yet been found on the TOC side, Meta has aggressively expanded to the TOB side of the Metaverse. Some time ago, Meta launched its first high-end VR headset, Meta Quest Pro, which is priced at $1,499, or about 10,741 yuan.


  Although Zuckerberg's statement, this VR product is mainly positioned in the office scene. However, on the TOB side, it can neither solve the pain points of enterprises, nor bring substantial cost reductions and efficiency enhancements to enterprises, which naturally makes it difficult for the sales of this product to cause too much splash.

 In fact, not only is the future sales of VR headset products full of uncertainty, but Meta's layout in other metaverses is also constantly questioned by investors.


  First, Horizon Worlds, Meta's metaverse social platform, had only upper body figures when it launched last year. At this year's Connect conference, the characters were equipped with "legs". However, due to the relatively poor immersion brought about by the lack of technology, games, social networking, and office heights have all been moved to Horizon Worlds, resulting in the lack of core competitiveness of the products. This not only caused complaints from users, but even Meta's own employees refused to use it.


  According to a recent internal Meta document, Horizon Worlds has less than 200,000 monthly active users. If you compare it with the millions of shipments of the Oculus lineup, you can't see how unpopular this platform is with users.


  Secondly, as a blockchain-based permissioned payment system proposed by Meta, Diem was reported in January this year that Meta was selling its stablecoin project Diem, and the Federal Reserve member bank Silvergate Capital would acquire Diem and its technical assets for $200 million.


  But many central banks, finance ministers, lawmakers around the world, and many privacy protection agencies around the world have questioned Diem and listed a number of issues related to Diem, including money laundering and financial stability. In the end, due to regulatory obstacles, the founder of the Diem project, David Marcus, left Meta, and its partners also withdrew, which also means that Meta’s attempt in the field of metaverse currency was a complete failure. So in the future, how will Meta make efforts to open up the currency scene in the metaverse?


  Finally, back in October last year, former Meta employee Frances Haugen also publicly accused Meta of "putting interests over safety." She said Meta knew that its products were fueling hatred and hurting children's mental health, but it was always on the lookout for profit.


  And in May, Immersion, a haptic technology development company, filed a lawsuit against Meta, accusing Meta of infringing its patents by creating an industry-leading virtual reality headset. Obviously, the continuous litigation of Meta also makes it difficult for the outside world to have a strong sense of trust in it, which makes the real landing of Meta in the Metaverse project even more distant.


  Should the winds of the metaverse stop?


  In fact, Meta, as the forerunner of the metaverse at home and abroad, is by no means an isolated problem. In my country, one of the earliest Metaverse companies in China, Yingchuang Technology, has been owed wages. The longest time has been half a year. The average salary arrears exceeds 100,000 yuan. Even the company's HR has also joined the salary collection team.


  The PICO acquired by Byte for 9 billion yuan also has many shortcomings in the construction of the content ecology. For example, according to VR gyro statistics, by 2021, among the global VR application platforms, there will be a maximum of 6,212 applications on Steam, followed by 2,284 types of VivePort, and Pico is less than a fraction of them.


  It should be pointed out that, although the future of any business model from concept to large-scale commercialization is bright, the road is tortuous. And the various shortcomings shown by Metaverse today are also the performance of the industry "crossing the river by feeling the stones".

We have reason to believe that the Metaverse will penetrate into many industries and empower many industries in the future. For example, with the help of the blockchain technology in the Metaverse, the whole process of agricultural products from growth to transaction can be recorded and presented, and every link of agricultural production in the real world can be mapped, and the products can be traced.


  Obviously, this allows consumers to have a clearer understanding of the whole process of planting, production, processing, and circulation, crack down on shoddy behavior in the agricultural product market, protect the brand attributes of national geographical indication agricultural products, and promote It is of great significance for my country's agricultural product industry to develop in a healthy direction.


  But I just don't know whether the existing Metaverse companies can withstand the continuous losses, thunderstorms in performance, and the constant questioning of investors? More importantly, how can companies ensure sufficient limited cash flow? This may be a question that many Metaverse companies must think about today.




  The pressure on the advertising business is difficult to ease, and Metaverse continues to find no suitable profit-making method. In Meta, it's hard to see an inflection point in the company's performance. If the risk of foreign exchange fluctuations is superimposed in the future and inflation in various countries intensifies, it is estimated that Meta's subsequent financial reports will be even more ugly.


  For Zuckerberg, whether it is really necessary to adjust his business strategy, after all, to survive in the present is the most important thing for Meta.

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